Thread: Data Suggest U.S. Economy is Stagnating

Data Suggest U.S. Economy is Stagnating

MoneyNews
Thursday, Feb. 7, 2008
WASHINGTON -- The U.S. housing market has still not reached bottom, the number of workers drawing jobless benefits has hit a 2-1/4-year high and consumers are tightening their purse strings, reports Thursday showed, suggesting the economy may have screeched to a halt.

Pending sales of previously owned homes fell by 1.5 percent in December and were off a sharp 24 percent from a year ago, the National Association of Realtors said.

Separately, the Labor Department said new claims for unemployment aid edged down from a two-year high last week but the number of workers remaining on the benefit rolls has reached a level not seen since October 2005 in the aftermath of Hurricane Katrina.

On the retail front, a spate of reports from key chain stores like Wal-Mart Stores Inc and Target Corp showed consumers have pulled back on spending. Sales in January were below expectations and were down at some key retailers.

"The risk of recession has certainly gone up," said Mark Vitner, economist at Wachovia Securities in Charlotte, North Carolina, who expects growth to remain lackluster until the housing market bottoms out around midyear.


Concern about the economy's weakness, heightened by a warning on slowing orders at technology heavyweight Cisco Systems Inc weighed on U.S. stock prices, which were up slightly in early afternoon.

NO BOTTOM YET FOR HOUSING

For last year as a whole, pending home sales — a gauge of contracts signed for sales that have yet to close — came in at the lowest level since the real estate industry trade group began tracking the data in 2001.

"It's a great borrowing environment, but its not translating into sales because everybody is looking for the bottom of the market," said Bob Moulton, president of mortgage brokerage Americana Mortgage Group in Manhasset, New York.

Moulton said sales will not pick up until prices, which have been falling across the United States, come down further.

The Realtors group projected sales would remain soft until the second half of this year, and said the market should then begin to improve, particularly if limits on the size of loans government-sponsored enterprises Fannie Mae and Freddie Mac can buy are raised, a step Congress is considering.

The associaton said prices for existing homes were likely to drop by 1.2 percent this year, with prices for new homes tumbling by a bigger 4.3 percent.

JOB MARKET WEAKENING?

Weakness that last year had been pretty much contained in the housing market has begun to spread through the economy more widely.

A report Tuesday showed activity in the mighty U.S. services sector contracted last month, while data Friday showed U.S. employment shrank in January for the first time in 4-1/2 years.

New applications for unemployment benefits fell by 22,000 last week to 356,000, partially reversing a big spike the week before, but economists said the level, which was higher than expected, still suggested the labor market was weakening.

"We are having a lot of trouble in the labor market," said Lindsey Piegza, market analyst for FTN Financial in New York. "Generally, a 350,000-to-375,000 range is a recession warning zone."

The softening jobs market has made it increasingly difficult for unemployed workers to find new jobs.

The number of people remaining on benefit rolls after drawing an initial week of aid rose by 75,000 to 2.79 million in the week to Jan. 26. It was the highest level of so-called continued claims since October 2005.

RETAIL SALES SLACK

A soft jobs market could further imperil the consumer spending that drives two-thirds of the economy's growth. Already, signs have emerged that spending has softened.

Wal-Mart, the world's largest retailer, reported a 0.5 percent rise in January same-store sales, short of the 2 percent rise analysts expected. Target, the No. 2 U.S. retailer, posted a 1.1 percent drop in same-store sales.

January's sales data follow a disappointing holiday season for retailers and helped further fuel fears the economy could be tipping into recession.

"Given the difficult economic backdrop retailers and consumers are facing, expectations have still been pared to lower levels despite starting out at very modest initial projections," said Ken Perkins, president of research firm Retail Metrics.

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MaCain couldnt even spell U.S. Economy Stagnating let alone fix it...

MaCain couldnt even spell U.S. Economy Stagnating let alone fix it...

LOL

I finally got a chance to read the NYT magazine section of 1/27.
There were two that show a very scary future for our country.
The first article was about "Old School Economics." About our economic transition and whether our presidential candidates are aware of it.
Factory workers are a dying breed, being replaced by security guards, casino card dealers, landscape gardeners, etc. Just a few examples.
Yet our economy hummed along really well when we had manufacturing jobs aplenty. Workers and their families enjoyed wages they could live on......buy a home, car, pay the bills, food, etc.. without too much trouble.
Even our technology areas were alive and well, instead of being outsourced or stagnating. We prospered as a nation as well as invidually. This was a healthy economy.

We have now entered the "service economy." This bodes very nasty for us. No one can live on what a Walmart clerk or security guard makes. Not if supporting a family in todays environment. Heck most of those jobs don't pay enough for a single person to live on today.

Where was everyone while this was going on? Did they ever realize the extent they were crippling this nation? Did they give any thought to what they were assisting in unleashing onto the public?

You have to ask do they care? Are they aware yet of what their actions have done to us? I think they live in a fantasy world. If any of our politicians actually had to go to work everyday and earn a living, as compared to what Americans do every day, they wouldn't survive. They haven't a clue what is going on in America. They get some 'power' and lose touch and reality. This is another thing I find distressing, the incumbancy rate. We need term limits IMHO. This would help limit the damage they can inflict and not allow a big buildup of lobbyists kowtowing to them. New ears, eyes every few years might bring some progress in what is really important instead of the posturing we get now. Now, I think we are lucky they don't "work" more than a few days, it lessens the damage they can do.

Second article has to do with world standing. It deals with our economic problems, which have made us less of an economic influence (dollar undermined; what I refer to as funny money) as well as strategic influence. Our wars, spending etc are crippling us every way. We are being replaced as a World Power by China and the European Union. Asian economy is going gang-busters as well as the European Union's. We have spread ourselves so thin around the world, with our "necessary" presence, as well as interferring where we should have stayed out of the game.

"Waving Goodbye to Hegemony"
Interesting word, had to look that one up from Merriam-Webster:hegemony.Knew the general idea of it, but this gives it the pizzaz it needs.
Main Entry: he·ge·mo·ny
Pronunciation: \hi-ˈje-mÉ™-nÄ“, -ˈge-; ˈhe-jÉ™-ËŒmÅ

There is another part that's good:

Condoleezza Rice has been quoted as saying that "America has no permanent enemies". NYT makes the statement that we have no permanent friends either.

Just some food for thought.

I know we have a lot of other things on our minds.

I thought the Communist Chinese were our freinds. Isn't that why we do so much business with them?

Originally Posted by jp_48504

I thought the Communist Chinese were our freinds. Isn't that why we do so much business with them?

Yep we pay, pay, pay and they take, take, take till we get poisoned then they write the big I’m sorry letter and we pay some more, they take two or three more industries from us and then its back to send the Americans the poison. Great friendship, Just love for man kind at its best.

Oh I almost forgot,
They can Fix a stalled economy with a small 500 billion dollar loan of our own tax money so we can buy more stuff from them so they can loan us more money ! sounds like a Bad drug abuse commercial, don’t it ?

You have to admit its a joke, global economy depends upon Americans and their consumerism. Spend, spend, spend just so we can keep everyone's economy humming. Seems they like us just like our government, in debt.

Originally Posted by jp_48504

I thought the Communist Chinese were our freinds. Isn't that why we do so much business with them?

Occasionally my company gets e-mail from Chinese companies advertising what they make and how "affordable" (cheap) it is. I now e-mail them back and say when they get rid of the Communist Party and have personal rights and freedoms we will think about it.